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Why So Many Fashion Brands Are Launching Right Now

Entrepreneurs have founded tens of thousands of new retail businesses during the pandemic, sensing an opportunity amid the upheaval. What will it take for these new brands and stores to succeed?
Marmalade's new store in Brooklyn. Courtesy.
Marmalade's new store in Brooklyn. Courtesy.

For years, Hudaina Baig dreamed of starting her own sleepwear line. But her work as a social media marketing consultant consumed her life, and there was never a right moment to kick things off — until last year.

Stuck at home during the lockdown last spring, Baig and her business partner, Carly Sutherland, suddenly had plenty of time on their hands. They also had newfound clarity: they had both always wanted to open their own company. Why not just go for it?

Sona Wear, a collection of pyjamas and loungewear, is on track to launch later this year.

“Having this time to reflect and not be around people and traffic and having to travel for work... it cleared up so many things to help me understand what my next steps should be,” Baig said.

Baig and Sutherland are part of an unprecedented wave of entrepreneurship that has swept the US retail landscape during the pandemic. Americans registered nearly 187,000 new businesses in the first two months of 2021, more than double the same period last year, according to the US Census Bureau. These enterprises range from venture-backed start-ups to neighbourhood boutiques to fledgling fashion lines launched out of living rooms and garages.

Experts say a number of factors are driving the boom. Mass unemployment early in the pandemic likely spurred some to start businesses out of necessity. Others are hoping to capitalise on lifestyle changes during the pandemic, including a surge in online shopping, new categories such as face masks and seemingly endless demand for comfortable clothes and skin care products.

Baig’s pyjamas, for example, are designed for women to seamlessly transition from breakfast to Zoom calls — a market that would have seemed faintly ridiculous prior to March 2020.

“This [entrepreneurship] trend is even more dramatic than what we saw in the 2008 recession,” said Cynthia Franklin, director of entrepreneurship in NYU Stern’s Berkley Centre for Entrepreneurship. “The pandemic revealed a lot of the old-school ways of doing business that makes people stop and question just why are we doing things this way?”

It helps that setting up a business has never been easier. A would-be entrepreneur can pay Shopify to set up an online storefront, and Facebook to find customers. Shopify said the number of new stores on its platform increased by 79 percent in the US last year compared with 2019. Record-low interest rates help smooth over start-up costs.

This [entrepreneurship] trend is even more dramatic than what we saw in the 2008 recession.

To be sure, not everyone has equal access to the new retail gold rush. Initiating a business still requires significant capital investment, and some won’t have access to credit to take advantage of historically low interest rates. White-collar professionals, who were far less likely to lose their jobs, and more likely to have money in the soaring stock market, have a head start.

But for those who can scrape together a little cash, the pandemic has created a sense of renewed purpose, and ambition.

“As with many people, we were on this rat race, this ladder to achieve this and that and the pandemic forced us to step back and think about what matters,” said Elizabeth Egan, who recently launched soap brand, Dally, with her husband and business partner, Kevin Egan. “What matters for us is creative expression — to own a project.”

Lifestyle in Flux

Shopé Delano, a brand consultant, had long flirted with the idea of starting her own workwear line catering to women in creative and freelance-oriented fields where work occurs outside of conference rooms and often bleeds into social events. Even before the pandemic, she believed the line between work and play would grow increasingly blurry, especially as more people developed side hustles.

Pre-pandemic workwear seemed to cater mainly to the corporate woman, which Delano described as a largely white and wealthy professional class she didn’t identify with. The shift to remote work during Covid-19 changed all that.

Sensing an opportunity, Delano started her brand, Kind Regards. She began working on samples last fall and hopes to unveil her first styles later this year.

“One of the main things the pandemic did was make comfort non-negotiable,” Delano said. “And we’re realising that generally, the old model of work is dying. There’s a paradigm shift toward self-defined work.”

Those trends may be here to stay. A PwC survey conducted late last year found that 83 percent of employers see their shift to remote work as a success. Consumer psychologists and fashion executives have predicted that comfort will remain a priority in dressing for years to come.

Baig and Sutherland too are counting on the continued flexibility between life and work to generate demand for their sleepwear, which is designed to be professional enough for virtual meetings.

The Work-From-Home Advantage

For the Egans, it was being stuck home together as business partners that made building their brand possible.

Working from home will continue to be an advantage to budding entrepreneurs.

“When we were in lockdown 24/7, yes, we still had to take care of our toddler, but it didn’t matter what hour of the day or night it was, we could troubleshoot and brainstorm and work through concerns to get Dally moving forward,” said Kevin Egan, a freelance advertising copywriter.

Working from home will continue to be an advantage to budding entrepreneurs, according to Arian Simone, co-founder of the venture capital firm Fearless Fund.

“Nowadays, people who may have had a side business can dedicate more time to it,” she said.

There’s another advantage to being stuck at home: Without going out to dinner or weekend getaways, people end up saving money. According to Shopify, small business owners spend an average of $40,000 in their first year.

“We saved a lot of money from just the normal day-to-day stuff,” said Baig. “That has helped us put the cash together in order to deploy [the business.]” For now, Sona Wear will be self-funded.

A Tenant’s Market

Not all of the new retail businesses are online. More than 12,000 stores closed last year, according to real estate firm CoStar Group. Many landlords are lowering rents to fill those vacancies.

Marie Widmyer opened her first fashion boutique in Coeur d’Alene, Idaho about 15 years ago. In 2007, she opened another store called Marmalade, which sells brands like Stine Goya and Batsheva. Before last year, Marmalade’s only expansion has been building out a vintage floor in the basement.

Widmyer and her daughter Kasey, who helps run the business alongside her sister Kaity, had a long-term plan to open a store in New York City. The pandemic sped up their plans. Marmalade’s sales shot up in 2020 thanks to local support for small businesses, providing the extra cash the Widmyers needed to expand. Meanwhile, retail rents were plummeting in the Big Apple as businesses were forced to abandon their storefronts. In a report conducted last fall, the Real Estate Board of New York found that retail rents in the city have dropped to historic lows — as much as 25 percent compared to 2019 levels.

The mother-daughter pair began looking at potential locations in Brooklyn, and Kasey quickly found a space in Greenpoint where the rent was far lower than expected. By December, Marmalade New York was open for business.

“If the rent wasn’t so discounted, we shouldn’t have been able to expand,” Kasey said. “And during that time our sales were up too, so it seemed less like a huge risk.”

Breaking Through the Noise

While it may be easy to launch a brand, it’s much harder to sustain it.

“One thing we like to say is that CAC [customer acquisition cost] is the new rent,” said Baig. “The cost to advertise and market online has continuously increased while these digital channels are starting to get more and more crowded… for a new brand that we’re starting, we need to be diligent about everything.”

That means not only having a product that stands out but also finding ways to break through the noise of internet marketing, she added.

Delano, meanwhile, plans to stand out through community building.

“It’s never been easier to start a direct-to-consumer brand with Instagram, with Facebook, and with a lot of factories being open to preorders,” she said. “But for me, having a distinctive point of view is how I can differentiate — really having something to say that someone else isn’t saying and galvanising the community around that.”

Jamie Makeup, a cosmetics brand by makeup artist Jamie Greenberg, launched last fall. To stand out and acquire customers, the plan is to avoid reliance on expensive ads on social media and Google. Instead, the company will leverage Greenberg’s existing social media following by promoting giveaways and partnering with other brands, according to chief operating officer, Josh Greenberg, Jamie’s husband.

“The amount you’d have to spend [on social media ads] would be very different from three years ago because it’s just become so saturated,” Josh said. Ultimately, he added, it will be the power of the product itself that potentially attracts shoppers.

Thousands of new brands will be born this year, but ultimately, few will survive. About 20 percent of new businesses started between 1995 and 2012 failed to survive beyond their first year, and 60 percent closed within a decade, according to the Small Business Administration.

“I joke with my students that starting a business is actually easy,” Franklin said. “Keeping it going is the hard part.”

Related Articles:

How Modern Entrepreneurs Are Made

5 Lessons on How to Build a Business in Fashion

What Shoppers Are Thinking Right Now



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